Where there's a skill, there's a way
05 December 2017
Getting back to pre-recession levels of productivity in the UK economy demands a hard look at what’s in the bank in terms of skills. It’s not enough to push vocational education for younger people, says The Work Foundation’s Lesley Giles. We have such a skills legacy of underinvestment that it’s going to take wide-ranging collaboration between Government, employers and individuals across the whole workforce.
Unlike previous recessions, the effects of the crisis in 2008 have been long-lasting for the UK. Time isn’t going to be a healer. Two-thirds of employees work for firms with below average productivity expected for their size or sector, and the distribution between our best and least performing businesses is wide, especially compared to other countries. There’s also a growing divide between the top and bottom, with recent research from the CBI showing that the most productive areas of the UK are three times more productive than the least.
There’s no simple consensus on the root causes of the productivity problem, but many experts point a finger at the essentials of how businesses are run and look after their people – are employers making full use of employees and their skills, as well as encouraging them to develop and perform? In other words, in a world of greater flexibility and competition, questioning whether employers are providing ‘Good Work’, offering fulfilling work with security and opportunities for development in return for loyalty and commitment to higher performance.
Which gap to fill?
During the past couple of decades, the Government has prioritised boosting employment and skills levels as a core strategy to promote economic recovery, leading to a running stream of reforms and initiatives. We have the most qualified UK workforce ever seen, with a move to more higher skills at the top levels of the job market, but also glaring inequalities right across the skills spectrum and especially lower down the career ladder. There has been a focus on young people and improving the skills of coming generations, leading to the major investments in apprenticeships. Yet again, the problem with this is that we still need to catch-up and address a legacy of underinvestment into skills among people already in the labour market – 9 out of 10 of those already in the workforce will still be there in 10 years’ time. The urgent need too is also for upskilling, lifelong learning and Continuous Professional Development. Reforms can be important but need to be based on a clear vision of where the real problems are, root and branch and not patching up the cracks.
We have a skills landscape riddled with many different kinds of skills challenges. We have people coming out of university with skills that aren’t needed, who are under-utilised; employers who can’t get people with the skills they need reporting shortages; an ageing workforce challenged by new ways of working; excluded workers who don’t have the skills to get back on the ladder; and growth in low skills jobs among people who then become stuck at the bottom with no opportunity to develop because there are fewer middle-level jobs to move into. Their problems may also be hampered by a more limited experience of learning.
The Government has tended to blame employers for not doing enough consistently around skills, pointing to evidence of a decline in expenditure - and leading to the recent introduction of the apprenticeships levy, which essentially forces large employers to invest in technical education. But the levy is a potentially blunt instrument, not taking into account the reality that it has always been the large employers who have invested most into skills. As larger employers will be the most keen to recoup their levy investment, this may mean less funding to incentivise the growing numbers of smaller firms that have traditionally been less likely to train.
Keep it steady
So who needs to take responsibility? After all, everyone has a stake in skills. Individuals, businesses and economies all need them to keep pushing for prosperity in their own ways. There’s a well-established principle that Government provides the foundation in terms of education and skills, providing a level playing-field in the name of social equality and tackling any market failures. The individuals and businesses themselves need to top up on the minimum provision if they want to go further.
The sheer amount of reform and the number of different system changes, has blurred the lines of responsibility, leaving question marks over who needs to be making the investment in skills. Where other countries - like Germany, typically offered as the gold standard - have done this better is by sticking to a stable and long-term system of technical education where everyone knows where they stand, there’s an established model of co-investment. We need this kind of period of stability, with reforms given the chance to become embedded, supported, the value to be seen and appreciated, and employers know what they have to work with. Time for implementation matters, not the news of another bold reform with big ambitions. We need an infrastructure for skills that is settled and can then deal with all the changes in the economic, political and business context. We need to start paying more attention to understanding what the actual career paths are, where skills come into them and how.
We need to make sure that schemes are responsive to and in keeping with modern ways of working and the needs and expectations of employers. It’s not always been the way. For example, many publicly-funded schemes for skills have been focused on preserving classroom based delivery and a general education offered through Further Education institutions which aren't seen as being at the forefront of skills by businesses. Employers increasingly see the value in a full blend of learning methods that are more flexible and evolve around a job. This includes more recognition for the value of on-the-job learning, particularly when it’s blended with technology and supports e-learning, fitting around working lives. The reforms continue to place a lot of emphasis on classroom learning assuming that work-based methods will be too narrow and of low quality, which is not the case if you look to international approaches promoted by the OECD. The ‘earn while you learn’ model is the right one, given the clear benefits to both employer and participants, but needs re-inventing and given some new impetus.
Our policy infrastructure with industry and employee membership bodies, who take a lead on representing the skills interests of employers and employees in various work areas, is quite fragmented across the UK. Over the years we have seen various waves of reform moving from industry training bodes, to lead bodies, sector skills councils and most recently industry partnerships. Consequently, the capacity and capability of such partners to shape high quality and relevant education and training programmes has been severely compromised. International lessons suggest future progress will come from supporting the action of respected industry partners including trade unions and professional bodies at a local level working through employer networks with universities, colleges and schools, enabled by Government. The industrial strategy combined with wider reforms supporting devolution and stronger technical education routes and career pathways provide the opportunity to support such collaborations locally.
Higher Education has a particular role to play. The UK has some very successful ‘frontier’ businesses that are highly innovative, but is also recognised as having a very long tail of less successful businesses. HE can help pull up the underperforming organisations by strengthening the working of local partnerships and “ecosystems”. Universities can offer business support, improving innovation and management practices acting as a facilitator, and encouraging the sharing of good practice, collaboration and knowledge transfer. In our context of instability and policy reform, HE is the one example of policy continuity, the rock that can deliver stability for businesses, creating communities with access to new technologies and skills across whole supply chains, from big to small firms.
Skills reforms and initiatives need to be inclusive and work for employees at all levels, providing opportunities for all. The Government can’t make this happen on its own - only help to provide the best infrastructure for the players to see and be active in seeking the benefits from being more highly-skilled. Whilst the industrial strategy and wider reforms aligned to it, are initiating important steps, we must make sure that we give sufficient focus to how these playout in individual firms and in particular shape working practices. Ultimately, this must come down to watching how future developments both impact and influence what goes on in individual workplaces and supporting more Good Work where employers invest in and use the skills of their employees to secure business success. This is absolutely something we can’t afford to lose sight of.